Question

In the area of “income” there is a wide variety of adjectives that precede the word, domestic, national, gross, net, nominal, and real to identify the important ones. Thoroughly differentiate what exactly is being included or excluded when that adjective is used.

Answer 1

A national income of a country is the income earned through all the sectors of its economy by its citizen within or outside the country over a period of time. Therefore national income includes-

1. Domestic income i.e. income earned within the geographical borders of a country
2. Adding to which is the income earned by its citizens abroad and subtracting the income earned by foreigners inside our territory
3. Gross can be seen as a term which includes depriciation hence Net National Income = Gross NI - Depreciation